This article first appeared on GuruFocus .
MediaTek ( MDTTF ) shares have jumped 187% since the end of March, putting the Taiwanese chipmaker on track for its best quarter on record as investors increasingly bet its artificial intelligence chip push could become a new growth engine. The rally has added more than $140 billion in market value, making MediaTek one of Asia's top performers, helped by growing optimism around its ASIC design work with Alphabet's Google (GOOG).
The market appears to be revaluing MediaTek beyond its traditional smartphone-chip image. Handset chips still account for around half of sales, leaving the company exposed to sluggish smartphone demand, but investors are now looking at ASICs as a possible path into faster-growing AI infrastructure. These chips can offer major tech companies lower costs and more customization than Nvidia-style GPUs used for AI training, while MediaTek's Google relationship is raising expectations that it could win more business and possibly take share from Broadcom.
MediaTek expects its AI business to generate about $2 billion in revenue this year, with management targeting stronger momentum in 2027 and as much as 15% of an $80 billion market next year. The stock now trades at 47 times forward earnings, compared with 24 times for Broadcom ( NASDAQ:AVGO ) and 21 times for Taiwan Semiconductor Manufacturing Co. ( NYSE:TSM ), but consensus EPS estimates have risen more than 30% since early February. Analysts remain broadly positive, with 29 buys, 2 holds, and no sells, while Mizuho's Kevin Wang said incremental AI business could drive earnings growth of more than 60% per year over 2027 and 2028.
